Exciting fintech trends found their footing in 2022 and will continue to shape the industry in 2023. Make sure your company has fintech developers on its team and is ready to take a competitive advantage by staying at the forefront of the fintech industry with these top fintech trends for 2023.
What Is Fintech?
Fintech is any technology, mobile application, or software that helps financial institutions — and your company — improve and automate the traditional ways of paying for goods and services. Electronic funds transfers, digital wallets, and cryptocurrency exchanges are examples of technologies leading the way in consumer transactions.
5 Trends in Fintech for 2023
Fintech technology and innovation are accelerating across the industry, with more companies recognizing the importance of adapting to changing customer needs. In 2022, Expert Market Research estimated the global fintech market was valued at over $194.1 billion, with continued growth expected in 2023. Here are some emerging fintech trends that will shape the industry in 2023.
1. Embedded Finance Solutions
Embedded finance solutions integrate financial products and services into a nonfinancial application or product, such as a mobile app or website, thus making them more accessible to customers. For example, when you buy something online, you can pay with your digital wallet or other fintech-based payment methods, such as online savings accounts.
This fintech trend started when the financial service industry recognized the opportunities of offering services to their customers without the need for a traditional banking institution. This led to more traditional banks offering embedded finance solutions and the emergence of digital-only banks.
This trend will continue in 2023 as more companies recognize the time and cost savings associated with embedded finance solutions. More companies will leverage the power of fintech to provide tailored financial services for their customers.
A report by Dealroom, a market intelligence company, estimated that the market size of embedded finance solutions will reach $7.2 trillion by 2030 — surpassing the value of both fintech startups and the top 30 global banks and insurers combined. The report also predicts this growth will be driven by insurance, lending, and payments-related services, such as branded credit cards.
Examples of Embedded Finance Solution Companies: Stripe, Plaid, Payrix
2. Artificial Intelligence Is on the Rise
AI technologies, including machine learning, natural language processing, and computer vision, are rising in fintech. Financial institutions use AI to automate processes, including:
- Accessing consumer data to analyze financial health during loan processing
- Identifying fraudulent activities
- Optimizing customer service, such as using AI-driven chatbots to quickly and accurately answer customer questions
In 2023, you can expect these trends to continue as banks and financial institutions invest in their AI capabilities, particularly in security, due to the ever-increasing threat of cybercrime. A report by Grand View Research states that the global market size of AI in fintech, valued at $0.45 billion in 2021, will grow at a compound annual growth rate of 16.5 percent from 2022 to 2023. AI will become an essential part of fintech in the coming years.
Examples of AI Finance Companies: Zest.ai, SAP, Numerai
3. Clarity Around the Embedded Financial Industry
While more companies provide fintech solutions, the embedded financial industry still has a long way to go. Industry clarity is needed to address the following:
- A lack of regulation surrounding the sector
- A lack of clarity about who is responsible for customer protection
- A lack of clear accountability about whom to turn to for help
- A lack of transparency, with customers often unaware of how their data and information are used
Regulators are aware of this lack of clarity and looking to address it in the coming years. Watch for increased regulatory intervention over the next few years to ensure companies use fintech services safely and securely. This will include the improvement of the infrastructure needed to support these services.
4. A Focus on Less-Developed Markets
Investors in fintech are looking toward underdeveloped markets in Africa, Southeast Asia, and Latin America for several reasons, including their:
- Tremendous growth potential due to untapped markets
- Lower compliance and operational costs
- Ability to provide unique opportunities for companies to develop and test innovative products
For instance, India has over 1.3 billion people and a rapidly growing economy. This is an opportunity for fintech apps and companies to tap a new customer base, particularly as more people within these markets are turning to digital solutions for their financial needs. Customers in countries such as India and Nigeria have widely adopted mobile money solutions and digital banking due to their convenience and low cost.
Example of this trend: Sendwave - a money transfer company that safely transmits money between loved ones and countries, and easily converts to the currency.
5. Blockchain Technologies Will Stay Quite Popular
Blockchain has become a buzzword in the fintech industry, with many companies looking to leverage its potential. Blockchain technology is a distributed ledger that stores immutable data and processes transactions securely and efficiently. It is a secure, transparent, and decentralized technology that allows for faster and more efficient transactions by eliminating the need for intermediaries. This makes it particularly attractive for the fintech sector, as it can supply a secure platform for payments and data management.
In 2023, x will likely gain widespread adoption as more companies recognize its potential. For instance, a report by Meticulous Research indicates that the fintech blockchain technology market will grow to over $36.04 billion by 2028. With a compound annual growth rate of 59.9% from 2021 to 2028, this will be a significant trend to track in 2023.
Using cryptocurrency assets, such as Bitcoin and Ethereum, is a growing trend in fintech. Despite some uncertainty about their future, cryptocurrencies are more widely accepted as payment. Many companies now allow users to store and make transactions with cryptocurrencies. The interest in digital currencies for payments — and investment opportunities — will continue to grow in 2023.
Examples of this trend: Tether and BinanceUSD are two examples of StableCoins that are trending and both of these use Blockchain technology.
Hire Fintech Developers With Revelo to Stay Ahead of the Curve
As the world continues to move toward digitalization, fintech industry trends will continue to evolve. Companies must stay informed of the latest developments to stay competitive, thus making them squarely positioned to meet customers' needs.
Is your business staying ahead of the curve? If you’re unsure, you can start by hiring developers with expertise in fintech trends. Revelo is a talent marketplace that connects tech companies with pre-vetted, remote software engineers. Revelo can help you find the perfect talent for your team so you can keep up with the latest fintech trends. Contact us today to get started. The financial technology (fintech) industry has become one of the most dynamic economic sectors. Consumer habits are evolving — think digital wallets and online banking — and companies must adapt to stay competitive. Fintech solutions are helping companies adapt to changing consumer needs.
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